Is Crypto Here to Stay?
Despite their volatility, cryptocurrencies have illustrated a staying power. Presently, crypto assets remain largely unregulated; one notable exception of which is the Cyprus Securities and Exchange Commission (CySEC). CySEC issued Circular C417 designed for Cyprus Investments Firms (CIFS) and covering investments in cryptocurrencies. Crypto brokerage firms must also apply to CySEC for a CASP (Crypto Asset Services Provider) license to be eligible to offer crypto related services to their clients, they are subject to the usual tax liabilities including Capital Gains Tax and Corporation Tax and compliance as well as anti-money laundering regulations.
The present lack of regulation has given rise to concerns regarding the limited protection available to both consumers and investors. The FCA for instance publicly noted crypto assets as being “very high risk, speculative investments” and provides a clear warning that “if you buy these types of crypto assets, you are unlikely to have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong.”
Helping Citizens Avoid Fraudulent Crypto Activity
CySEC has helpfully created a list of websites that have been found to commit fraud related to crypto, this is being continuously updated and there to assist citizens in avoiding being a victim of fraudulent activity.
On the other hand, it can be argued that the purpose of cryptocurrencies is that they are an unregulated and de-centralised mode of currency, free from government control, can withstand inflation and abuse from entities such as banks.
The Cypriot government is taking a notable positive stance regarding the growth of cryptocurrencies, Cyprus has progressed to one of the most considered countries for blockchain businesses, due largely to the country’s attractive tax system. Cyprus has signed the “European Blockchain Partnership” and the “Declaration of the Southern Mediterranean Countries on Distributed Ledger Technologies”, with the goal of further enhancing cooperation in the digital sector and rendering Southern Europe a leader in the distributed ledger technologies (DLT). It should be noted that there is no comprehensive legal framework in place governing blockchain and cryptocurrencies and the country has expressed no interest in restricting or banning them.
Written by Andie Henderson, Legal and Compliance Associate of Financial Associates International FAI Comply
FAI Comply undertakes the preparation and submitting of applications for CySEC CASP licensing and provides post-submission support leading up to the granting of the license, which authorises companies to provide investment services in accordance to applicable EU laws and regulations.